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The quality of life in the dynamics of economic development

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  • Krutilla, Kerry
  • Reuveny, Rafael

Abstract

The neoclassical economic growth model and its extensions in the fields of environmental economics and endogenous growth theory typically represent welfare as a single argument function of consumption when the models are analytically solved. This simplified welfare specification is narrower than those described in the quality-of-life literature and emphasized by proponents of sustainable development. The purpose of this paper is to analytically solve for the properties of a growth model based on a broader quality-of-life measure. The welfare measure includes two arguments, consumption and the stock of nature capital. This formulation enables an analysis of the consequences of the dynamic tension between conventionally defined economic growth and nature capital preservation. We find that a static model without technical progress yields diverse steady states, stability properties, and comparative statics, while a model with exogenous technical progress exhibits unusual comparative dynamics and balanced growth paths. These unusual outcomes have a number of policy-relevant implications for sustainable development.

Suggested Citation

  • Krutilla, Kerry & Reuveny, Rafael, 2002. "The quality of life in the dynamics of economic development," Environment and Development Economics, Cambridge University Press, vol. 7(1), pages 23-45, February.
    • Handle: RePEc:cup:endeec:v:7:y:2002:i:01:p:23-45_00
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    Cited by:

    1. Dionysia Lambiri & Bianca Biagi & Vicente Royuela, 2007. "Quality of Life in the Economic and Urban Economic Literature," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 84(1), pages 1-25, October.
    2. Xepapadeas, Anastasios, 2005. "Economic growth and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 23, pages 1219-1271, Elsevier.
    3. Kerry Krutilla & Rafael Reuveny, 2004. "A Renewable Resource-based Ramsey Model with Costly Resource Extraction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(2), pages 165-185, February.
    4. Oliviero Carboni & Paolo Russu, 2015. "Assessing Regional Wellbeing in Italy: An Application of Malmquist–DEA and Self-organizing Map Neural Clustering," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(3), pages 677-700, July.
    5. Guillermo Cruces & Andres Ham & Martin Tetaz, 2008. "Quality of Life in Buenos Aires Neighborhoods: Hedonic Price Regressions and the Life Satisfaction Approach," Research Department Publications 3260, Inter-American Development Bank, Research Department.
    6. Krutilla, Kerry & Reuveny, Rafael, 2006. "The systems dynamics of endogenous population growth in a renewable resource-based growth model," Ecological Economics, Elsevier, vol. 56(2), pages 256-267, February.

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